SARBOXED IN?(Sarbanes-Oxley Act of 2002)

Publication: The New Yorker

Publication Date: 12-DEC-05

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COPYRIGHT 2005 All rights reserved. Reproduced by permission of The Condé Nast Publications Inc.

In the summer of 2002, with the stock market tumbling and fraud at Enron and WorldCom dominating the headlines, there was immense political pressure on Washington to restore investor confidence by doing something about corporate crime. Scrambling to deflect charges of indifference to the plight of widows whose 401(k)s had vanished, Congress hastily wrote and passed the Sarbanes-Oxley Act (dubbed SarbOx), a tough piece of anti-fraud legislation. A Republican-dominated Congress might have been expected to oppose costly business regulations, but politics made SarbOx a thoroughly bipartisan affair. The bill passed unanimously in the Senate, and, when President Bush signed it into law, he proclaimed the end of an "era of low standards and false profits."

Washington's pride in SarbOx, though, was not universally shared. Businesses hated the complexity of the new rules (which,...

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